(Bloomberg) -- Exxon Mobil Corp. has shaken off its last bearish rating as a breakneck rally in oil prices spurred Redburn to upgrade the oil major to neutral.

Just seven months after Redburn’s downgrade to sell, Brent crude has climbed to trade over $86 a barrel because of Saudi Arabia’s extra 1 million-barrel oil supply cut back in July. While analyst Peter Low expects the current market tightness to moderate next year, higher oil prices could help producers such as Exxon.

“In contrast to the less-supportive macro environment we foresaw when we downgraded Exxon, we now expect the oil market to tighten in 2H23. Refining margins have also recovered in 3Q after a weak 2Q,” Redburn’s Low wrote in a note, adding that oil prices could temporarily spike to more than $90 a barrel. “Given this outlook we no longer see a near-term catalyst for Exxon to underperform on multiple compression.”

Exxon’s shares gained as much as 0.5% on Thursday in New York after losing its only sell or equivalent rating.

It’s been a tricky year for Exxon, which has lagged the gains seen across US equities. The stock is up just 0.5% year-to-date to yesterday’s close compared to a 18% rally for the S&P 500 Index as earnings for Big Oil have moderated from last year’s record levels. Exxon recently reported its third straight drop in profit due to weaker natural gas prices and shrinking returns from fuel sales, following a profit warning in July.

While Low may have ditched his sell rating, his new price target of $105 still suggests caution, implying just over 5% of downside from yesterday’s close.

--With assistance from Subrat Patnaik and Lars Mucklejohn.

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